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Started By
Message
taxes on early withdrawal IRA
Posted on 5/20/19 at 6:32 am
Posted on 5/20/19 at 6:32 am
My wife and I are currently building a house. Prior to construction we agreed she could cash out one of her IRA's for some finishes she wanted extra in the house. She cashed it out last week and had no taxes withheld. I am aware of the 10% early withdrawal penalty, but how much should we plan to put aside for taxes? last year we were in the 22% bracket.
6
Posted on 5/20/19 at 7:09 am to bayou choupique
Sounds like you already know it wasn't a smart decision, so we'll just ignore that.
10%+whatever your marginal tax rate is going to be when you add this distribution. Could be 22%, could be 24% depending on how close you were to that last year and how much this distribution is.
And that's if all else is equal from last year.
10%+whatever your marginal tax rate is going to be when you add this distribution. Could be 22%, could be 24% depending on how close you were to that last year and how much this distribution is.
And that's if all else is equal from last year.
Posted on 5/20/19 at 7:59 am to bayou choupique
Let's not just ignore that this is a bad idea. You're making somewhere above $100k annually and can't budget for finishing touches without tapping retirement and essentially paying a 30%+ premium on those items and losing years of growth. Find the cash somewhere else. If you're really cutting it that close you need to be prepared for other unforseen costs to pop up and those finishing touches may just need to be put on hold until you can actually afford them.
60 day redeposit rule is your friend. You can still undo this mistake.
60 day redeposit rule is your friend. You can still undo this mistake.
Posted on 5/20/19 at 2:55 pm to bayou choupique
Posted on 5/20/19 at 3:29 pm to bayou choupique
Agree with the other posts, but if you are set on taking it out. I would simply plug the figures into last year's return and see how it would affect you, then save accordingly.
If either of you are W-2 employees, you should also consider having extra taken out of your normal paycheck so you won't have such a big hit at the end of the year.
If either of you are W-2 employees, you should also consider having extra taken out of your normal paycheck so you won't have such a big hit at the end of the year.
Posted on 5/20/19 at 3:45 pm to Weekend Warrior79
Are the taxes and penalty taken upfront or on the back end when you file taxes?
Posted on 5/20/19 at 4:11 pm to bayou choupique
Do either of you have a 401k you could have borrowed against? I'm against doing that but it is better than what you are doing.
Posted on 5/20/19 at 7:11 pm to Paul Allen
quote:
Are the taxes and penalty taken upfront or on the back end when you file taxes?
Not 100% certain but I think the penalty is taken out upfront but the taxes are not.
Also, to the OP, this is a terrible terrible terrible decision. Find another way. You know it is the wrong thing to do.
Posted on 5/21/19 at 5:05 pm to bayou choupique
Ya know... I just don’t... I mean... For the love of.... Just how fu...
Forget it.
Forget it.
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